Barton Gold begins drilling at Tolmer prospect after strong investor backing for $3m placement

Barton Gold Holdings (ASX: BGD) (OTCQB: BGDFF) has commenced drilling at the high-grade Tolmer gold-silver discovery within its Tarcoola project in South Australia, underpinned by a recent $3 million premium placement to Australian investors.

The reverse circulation campaign is in the company’s Stage 1 operations area and is targeting an extension of the prospect’s high-grade ‘Western Silver’ zones, where previous exploration delivered “globally significant” assays grading up to 17,600 grams per tonne.

Barton has identified a line of seven discovery holes since uncovering Tolmer and believes the prospect could become a low-cost, high-revenue stream in parallel with Tarcoola.

Placement shares

Barton’s placement to precious metals-focused investors saw the issue of 4.28 million new shares priced at $0.70 each, at the time a 4% premium to the company’s last traded price and a 25% premium to its 20-day volume-weighted average closing price of $0.562.

The company will allocate funds from the placement to the acceleration of value-add exploration and project development initiatives, primarily reserve conversion upgrade drilling for the high-value starter pits at its Tunkillia gold project to support future conversion to ore reserve estimates.

The pits should produce a combined 365,000 ounces of gold and 923,000oz of silver during the first 27 months of production, generating between $956m and $1.3 billion in operating free cash flow.

Tunkillia’s current resource sits at 1.6Moz of gold, with an inferred silver resource of 3.1Moz as a subset of the gold mineralisation.

Strong endorsement

Managing director Alexander Scanlon said the success of the placement was a strong endorsement of the company’s low-dilution development strategy.

“Since our initial public offering four years ago, we have issued less than $13m in new equity while generating over $12m in additional non-dilutive funds through asset monetisation initiatives,” he said.

“The result has been significant progress and value creation on all fronts with minimal shareholder dilution, reflecting our team’s focus on preservation of value for our investors.”